Manufacturing 2.0

By Alan Finkel

The motor industry collapse brings urgency to the manufacturing dilemma.

Traditional manufacturing is declining rapidly in Australia. The recent domino collapse of the automotive manufacturing industry makes it vital that we address the issue now. We have to decide what the manufacturing sector should aspire to – jobs growth or economic growth. Over coming decades, increased revenue from fewer jobs might be the best we can hope for because we are entering an era of extreme automation.

The most advanced example of extreme automation I know of is IBM’s Watson computer, which won the TV game show Jeopardy. Watson is now being retrained as an expert oncology advisor to provide second opinions to senior cancer physicians at specialty cancer centres such as the Sloan Kettering Memorial Hospital in New York. If automation is about to transform this high end of human achievement, one can assume that every sector of the economy will be affected – and manufacturing more than most.

In the past, jobs growth stimulated by new technologies has compensated for losses in redundant occupations., but some economists think this might not be repeated this time – we may be looking at permanent unemployment for many. Andrew McAfee and Bjorn Brynjolfsson of Massachusetts Institute of Technology claim that automation already explains, at least in part, the increasing gap between productivity and jobs growth and the hollowing out of middle-class jobs. If so, all modern economies are in for tough times.

But it doesn’t have to be that way. McAfee and Brynjolfsson suggest that the key is for people to be able to compete alongside computers, not against them. Likewise, we need unions working alongside companies, not against them, to achieve substantially increased productivity,

Success will come from a national, coordinated approach. The lack of a national strategy to cover industry, R&D and education is a shocking omission from our political landscape. With a national strategy in place we will be able to maximise career opportunities for workers and market opportunities for companies, we will be able to optimise the collaboration between industry, universities and research institutes, we will be able to set goals and best practices in our schools to achieve the literacy and skill sets required by the future workforce, and we will be able to coordinate the regulatory framework across state and national governments to eliminate duplications and complexities.

If we can eliminate barriers to entrepreneurship and stop the blame game, the side benefit will be a change in attitude, through which more and more companies will transform themselves to adopt new technologies and seek new markets.

Australia has a growth opportunity it can take advantage of by putting to work the combined intellectual capacity of industry and academia, and by facilitating commercialisation of research outputs. There are many ways to improve the engagement between research institutes and industry, but high on the list would be to facilitate mobility of the workforce between the two sectors. Such facilitation could include recognition of non-publication achievements by academics, and new employment contracts like those in many American universities that would allow for 20% of an academic’s time to be spent working with industry and community.

But right now that’s small comfort to the thousands of workers at GMH, Ford and Toyota who have seen their lives and careers threatened and now face the issue that many of them may not work again once their current jobs disappear.

Australia’s government, industry and research leaders need to develop – starting now – a national strategy to cover the whole gamut of industry, scientific research, technology development and education. In developing this national strategy, Australia could get a head start by considering the Australian Academy of Technological Science and Engineering’s recent call for action on advanced manufacturing. Its key recommendations are:

to invest in critically important support technologies, such as automation software and robotic machinery;

to facilitate the commercialisation of research outputs by provision of incentives, and removal of tax, legal and other barriers;

to streamline regulatory requirements and eliminate regulatory duplications across departments within government and between federal and state governments; and

to secure low-carbon, low-cost energy sources.

Dr Alan Finkel AM FTSE is President of the Australian Academy of Technological Sciences and Engineering, and Chancellor of Monash University.